Bush administration lifts ban on offshore drilling in Alaska

THE Bush administration has lifted a long-standing moratorium on oil exploration in a 5.6million acre area in the North Aleutian Basin of Alaska’s Bristol Bay region. New Alaska Governor Sarah Palin welcomed the news: the prospect of exploration in Bristol Bay, coupled with the possibility of building a new gas pipeline, means more jobs and revenue for the state.

“It is gratifying that the federal government is again looking north to Alaska to provide the energy our nation needs,” Ms Palin said. “Development in the Bristol Bay region could provide the jobs, economic diversification and energy the people of this region need. If we can be sure it will not threaten the fisheries that are the foundation of the region’s economy and way of life, I’m all for it.”

In 1988, oil companies paid the federal government approximately $96 million for rights to explore and develop 122,000 acres north of Unimak Island and the western end of the Alaska Peninsula. Before any wells could be drilled, though, Congress and President George H W Bush set forth moratoria on the entire North Aleutian Basin following the Exxon Valdez spill in 1989, and the leases were bought back by the federal government. In 1998, the moratorium on drilling in the area was extended through to 2012 by President Bill Clinton; his order has now been rescinded by President Bush.

The outcome of this new decision will means significant revenue for Alaska and oil companies, plus new oil jobs. “For several decades Alaska has provided nearly 20% of the United States’ domestic supply of oil energy. Leasing in Bristol Bay could begin between 2010 and 2012. The jobs will follow quickly thereafter. It is big news, but I think Alaskans – and Canadians – are even more anxious to see what happens with the Alaska Natural Gas Pipeline,” Kevin Lutgarten, Vice President of OilJobFinder said.

The Alaska gas pipeline would run approximately 3425km from Prudhoe Bay to Alberta, Canada. From there up to 4bn cuft/d of Prudhoe Bay gas will enter the US’ existing pipeline infrastructure. Former Alaska governor Frank Murkowski had commented that the new gas pipeline project will employ 9,300 people at its peak and require 54-million man hours to complete. With the prospect of new oil exploration and drilling in the near future, as well as preparations for the natural gas pipeline, oil and gas employers are expected to encounter staffing shortfalls. The Bristol Bay drilling alone could amount to 11,500 new jobs according to the Minerals Management Service, which manages offshore drilling projects for the federal government.

Mr Bush’s announcement concerning Bristol Bay came as OPEC accelerated plans to reduce oil supplies in order to boost sagging crude prices. The administration also moved to increase royalty rates by a third for ultra-deep-water oil and gas drilling just as the House is preparing to roll-back oil industry tax breaks.